When applying for a long-term foreign loan in Vietnam, shall foreign bank branches be required to prove its loan purposes by presenting the debt restructuring plan?
- When applying for a long-term foreign loan in Vietnam, shall foreign bank branches be required to prove its loan purposes by presenting the debt restructuring plan?
- What are the contents of debt restructuring plans of foreign bank branches in Vietnam?
- What are the responsibilities of borrowers that are foreign bank branches without Government's guarantee?
When applying for a long-term foreign loan in Vietnam, shall foreign bank branches be required to prove its loan purposes by presenting the debt restructuring plan?
Pursuant to the provisions of Article 14 of Circular 08/2023/TT-NHNN on loan purposes:
Loan purposes
1. Short-term and medium/long-term foreign loans are used for:
a) increasing the borrower’s funding for credit extension activities to meet its credit growth target;
b) restructuring the borrower’s foreign debts;
2. When applying for a medium/long-term foreign loan, the borrower shall be required to prove its loan purposes by presenting:
a) The plan for use of foreign loan capital as prescribed in Clause 2 Article 7 of this Circular if the loan is used for the purpose defined in Point a Clause 1 of this Article; or
b) The debt restructuring plan as prescribed in Article 8 of this Circular if the loan is used for the purpose defined in Point b Clause 1 of this Article.
Thus, when applying for a long-term foreign loan in Vietnam, foreign bank branches shall be required to prove its loan purposes by presenting the debt restructuring plan if the loan is used for restructuring the borrower’s foreign debts.
If the loan is used for increasing the borrower’s funding for credit extension activities, the foreign bank branches shall prove its loan purposes by presenting the plan for use of foreign loan capital.
When applying for a long-term foreign loan in Vietnam, shall foreign bank branches be required to prove its loan purposes by presenting the debt restructuring plan? (Image from the Internet)
What are the contents of debt restructuring plans of foreign bank branches in Vietnam?
Pursuant to the provisions of Clause 2 Article 8 of Circular 08/2023/TT-NHNN, a debt restructuring plan shall, inter alia, include the following contents:
- The borrower’s particulars:
Information specified in Point a Clause 2 Article 7 of this Circular if the borrower is a credit institution or FBB.
Information specified in Point a Clause 3 Article 7 of this Circular if the borrower is not a credit institution or FBB;
- Information on the existing foreign loan and outstanding debts thereof, including: the lender, loan amount, currency, loan term, borrowing cost, loan purposes, withdrawal of loan capital, debt repayment, outstanding debts as at the planning date, debt amount to be restructured, code of the loan (for medium/long-term foreign loans), or statement of use of foreign loan capital (for short-term foreign loans);
- Information on the new foreign loan, including: the lender, loan amount, currency, loan term, borrowing cost, capital withdrawal plan, and plan to pay off outstanding debts of the existing foreign loan;
- Authority to approve the debt restructuring plan: approving authority and grounds for determining approving authority;
- Other contents (if any).
What are the responsibilities of borrowers that are foreign bank branches without Government's guarantee?
Pursuant to the provisions of Article 19 of Circular 08/2023/TT-NHNN, responsibilities of borrowers that are foreign bank branches without Government's guarantee include:
- Comply with eligibility requirements for foreign loans laid down in this Circular and relevant law regulations on foreign exchange management.
- Comply with regulations of the civil code, laws on enterprises, investment, secured transactions, and anti-money laundering, specialized laws, relevant laws and international practices when entering into foreign loan agreements and getting foreign loans.
- Assume legal responsibility for the accuracy and truthfulness of documents proving purposes of the foreign loan, and use foreign loan capital for the purposes defined in such documents as prescribed in Clause 2 Article 14 and Clause 4 Article 17 of Circular 08/2023/TT-NHNN.
- Retain adequate documents proving the borrower’s use of the foreign loan capital for proper purposes as prescribed in Article 14 and Article 17 of Circular 08/2023/TT-NHNN, documents on changes in the capital demand statement (if any) as prescribed in Clause 4 Article 7 of Circular 08/2023/TT-NHNN, and present them to serve competent authorities’ inspection of use of foreign loan capital.
- Keep record of each idle amount of money in case the borrower makes term deposits at credit institutions and FBBs according to the rules for using foreign loan capital in Article 6 of this Circular, and present it together with the documents proving the borrower’s compliance with Article 6 of this Circular to serve competent authorities’ inspection of use of foreign loan capital, when required.
Thus, borrowers that are foreign bank branches without Government's guarantee have the responsibilities mentioned above.
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